Startup Cloudyn Helps Customers Curb Cloud Spending

Reporter

The increase in software delivered over the web has spawned startups looking to find their niche in the cloud computing market. Israel-based Cloudyn launched last year to address a corporate pain point companies didn’t even know they had until the startup showed it to them: Many companies were throwing away money on the cloud. Cloudyn’s software, currently free, is available to customers of Amazon Web Services around the world, more than 200 of whom are using it. Rackspace customers are testing it in beta.

Cloudyn CEO Sharon Wagner

IT leaders purchase cloud computing so that they can cut back on the costlier alternative of buying and managing their own hardware. Cloud is particularly popular for what businesses consider non-critical applications such as human resources software. But many IT leaders are not using all of the computing resources they purchased from vendors such as Amazon Web Services, widely considered the leading vendor in the space. Companies that buy and run their own computing resources tend to acquire more computing and storage capacity than they need so they don’t have to purchase more later.

Cloudyn in May found 100 Amazon customers were wasting 40% of the money they spent on AWS by provisioning too many computing resources for some tasks and letting other computing workloads go unused. Such cloud computing waste is an ongoing problem for CIOs, said Cloudyn CEO Sharon Wagner, who said his software compares how much computing capacity customers are using to how much money they spend. Businesses give Cloudyn their Amazon account credentials to monitor their computing, storage and database consumption. Amazon offers a basic bill calculator and monthly billing alerts for customers. But Wagner says Cloudyn is more tailored to each company’s needs, monitoring the individual companies’ actual usage first to build specific, customized recommendations on the right cloud configuration and pricing model.

Wagner and Cloudyn co-founders CTO Boris Goldberg and Vice President of Products Vittaly Tavor, who knew each other from the close-knit Israeli startup industry, worked at three of the largest management software companies. Wagner specialized in cost management at CA Technologies. Goldberg worked on performance monitoring at BMC; Tavor was a development manager at Mercury Interactive, now owned by H-P.

Wagner said that when he left CA in early 2011 he realized that though cloud was catching on among enterprises looking to lower their costs by leasing computer resources from outside vendors, the model made it difficult for CIOs to optimize their IT spending. “The more cloud adoption increases within enterprises, CIOs and CFOs must have business solutions to manage their cloud,” Wagner said. So Wagner, Goldberg and Tavor built the Cloudyn prototype and tested it with users such as Evolven Software. Positive feedback led to $1.5 million in funding from Israeli venture capital firm Elron Electronic Industries last September.

Gadi Veinrib, a venture capitalist with Elron, whose portfolio also includes medical companies Given Imaging and BrainsGate, told CIO Journal he believed in Cloudyn because of the talent behind the company. “We are very much committed to this company, and to its success. We have the resources to support it going forward,” Veinrib said.

One year after launching, Cloudyn employs eight people and has spent $500,000 of its funding. Though Wagner said Cloudyn has enough cash for the next 12 months, he is in discussions with other venture capital firms for additional funding. Neither Wagner nor Veinrib would provide additional details about privately held Cloudyn’s finances. But Wagner said he expects Cloudyn to start generating revenues in July by charging for recommendations on how companies can curb what they spend on cloud computing. The company’s basic cloud monitoring service will remain free.

Cloudyn is opening an office in the U.S. later this month, hiring a business development manager. The manager, who Wagner declined to name because he has not started yet, has worked at Oracle and Symantec. He will be based in New York to help the company expand its sales as the company begins to roll out to Rackspace customers, and eventually, Microsoft Windows Azure customers.

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